Indian crypto exchanges witnessed a steep decrease in trading volumes after the country’s new crypto tax legislation came into effect on April 1st. The new crypto law imposed a 30% tax on any digital asset capital gains.
According to local crypto media voice Aditya Singh, the trading volumes on major Indian crypto exchanges like ‘WazirX’, ‘Coindcx’, ‘Bitbns’ and ‘Zebpay’ were drained by at least 50% over the course of a single day.
WazirX, India’s biggest cryptocurrency exchange with a $43 billion annual trading volume, experienced a trading volume drop of over 51%, from $208 million to $100 million between April 1st to April 2nd. The 24-hour volumes continued to fall further on Sunday 3rd and amount to slightly over $80 million as of today.
Throughout the same period, crypto trading app ‘ZebPay’ lost more than 75% of its volume, marking a decline from the $20 million recorded on Friday, down to just $5 million on Saturday, April 2nd. The decrease in volume persisted over the weekend and sat just above $4.5 million early on Monday.
Another Tax on the Horizon
Despite the harsh impact that the newly imposed tax had on India’s cryptocurrency market, the local government announced the additional 1% tax deductible at source (TDS) on all crypto transactions valued over a certain level.
This means that all persons and entities will be required to pay an additional 1% tax on any digital transfers at the time of payment if the amount exceeds certain thresholds.
The new law will come into effect on July 1st and will be the world’s first-ever such tax category applied to digital currencies.
Critics of the government have argued that such a strict tax policy could drain the liquidity out of the local cryptocurrency market and further encourage traders to transition to decentralized exchanges, or even to foreign trading platforms.